7 Best Working Capital Loans of 2022
Tom has 15 years of experience helping small businesses evaluate financing and banking options. He shares this expertise in Fit Small Business’s financing and banking content.
This article is part of a larger series on Business Financing.
A working capital loan is short-term business funding used to finance a company’s day-to-day operations, such as buying inventory or covering payroll. Common small business working capital loans include lines of credit, term loans, invoice financing, and merchant cash advances (MCAs). We reviewed working capital loan providers on costs, terms, and qualifications to identify the top seven:
- Bluevine: Best overall line of credit
- Fundbox: Best for newer businesses
- SMB Compass: Best for flexible options
- Funding Circle: Best for longer repayment terms
- SBG Funding: Best for business owners with lower credit
- National Funding: Best for equipment lease financing
- Lendio: Best platform for comparison shopping
Bluevine: Best Overall Line of Credit
BlueVine
What We Like
- Competitive rates
- Fast funding
- No origination fees
What's Missing
- Need to make at least $500 in a minimum draw
- Required to be in business at least a year
Features
- Interest Rate: As low as 4.8%
- Expected Annual Percentage Rate (APR): 10% to 70%
- Origination Fee: None
- Loan Amount: Up to $250,000
- Repayment Term: Six or 12 months
- Repayment Schedule: Weekly or monthly
- Personal Guarantee: Required
- Collateral: Blanket Uniform Commercial Code (UCC) filing
- Minimum Credit Score: 625
- Minimum Annual Revenue: $120,000
- Minimum Time in Business: Six months
- Funding Speed: One business day
Why we recommend Bluevine: We named Bluevine as the best option for a working capital line of credit because it offers flexible terms, relatively high credit limits, and competitive interest rates to help businesses manage their working capital. Besides weekly or monthly payments, limits up to $250,000, and a starting annual percentage rate (APR) of 10%, Bluevine also has a 10-minute application and funding available as soon as the next business day. Bluevine’s unsecured line of credit requires a credit score of 625 to qualify.
Fundbox: Best for Newer Businesses
Fundbox
What We Like
- Fast funding
- Will finance newer businesses
- No additional fees
What's Missing
- Short repayment terms
- Lower credit limit than several competitors
Features
- Interest Rate: As low as 4.66% for 12 weeks, as low as 8.99% for 24 weeks
- Expected APR: As low as 18%
- Origination Fee: None
- Loan Amount: Up to $100,000
- Repayment Term: 12 or 24 weeks
- Repayment Schedule: Weekly
- Personal Guarantee: Required
- Collateral: Blanket UCC filing
- Minimum Credit Score: 600
- Minimum Annual Revenue: $100,000
- Minimum Time in Business: Six months
- Funding Speed: One business day
Why we recommend Fundbox: Fundbox offers a line of credit of up to $100,000 that’s an easier loan option for newer and smaller businesses. Your business needs to show $100,000 in annual revenue and have operated for six months to qualify. Fundbox only offers weekly payments with terms up to 24 weeks. Interest rates start at 4.66% for 12 weeks of financing, with funding as soon as the day after you apply.
SMB Compass: Best for Flexible Options
SMB Compass
What We Like
- Number of potential uses for businesses
- Low minimum financing requirements
- Fast application process
What's Missing
- Additional fees may apply
- Decision times may be slower for secured lines of credit
Features
- Interest Rate: 5.75% to 30%
- Expected APR: 8% to 35%
- Origination Fee: Varies
- Loan Amount: $10,000 to $5 million
- Repayment Term: One year, revolving
- Repayment Schedule: Monthly
- Personal Guarantee: Required
- Collateral: Blanket UCC filing for unsecured line
- Minimum Credit Score: 625
- Minimum Annual Revenue: $120,000
- Minimum Time in Business: Six months
- Funding Speed: As little as 24 hours
Why we recommend SMB Compass: We ranked SMB Compass as one of the best working capital lenders because of their flexibility in lending options. SMB Compass offers lines of credit for inventory, equipment, payroll, and also purchase orders (POs). SMB Compass will base decisions in part on your bank statements and general business performance. While a good credit score is desired, it isn’t the main consideration. Its competitive rates are also attractive for qualified businesses who are seeking financing. It’s worth noting that the lowest interest rates available will likely require some form of collateral.
Funding Circle: Best for Longer Repayment Terms
Funding Circle
What We Like
- Longer repayment terms
- Competitive interest rates
- Relatively fast funding
What's Missing
- Not ideal for newer businesses, given the two-year requirement
- Relatively higher minimum credit score requirement
Features
- Interest Rate: 4.99% to 27.79%
- Expected APR: 11% to 35%
- Origination Fee: 3.49% to 6.99%
- Loan Amount: $25,000 to $500,000
- Repayment Term: Six months to five years
- Repayment Schedule: Monthly
- Personal Guarantee: Required
- Collateral: Blanket UCC filing
- Minimum Credit Score: 660
- Minimum Annual Revenue: $120,000
- Minimum Time in Business: Two years
- Funding Speed: As soon as three days
Why we recommend Funding Circle: Funding Circle offers a working capital term loan with a repayment of up to five years. Its interest rates for qualified borrowers are very competitive. Approval and funding can occur in a matter of days in some situations. Funding Circle is best suited for established businesses with solid personal credit, as it requires a business to be in operation for two years and its owners to have a credit score of at least 660.
SBG Funding: Best for Business Owners With Lower Credit
SBG Funding
What We Like
- Easier qualification standards
- Relatively fast funding
- Longer repayment terms
What's Missing
- Origination fees can be relatively high
- APR may be high for newer businesses or those with lower credit
Features
- Expected APR: 5% to 35%
- Origination Fee: Varies based on amount borrowed
- Loan Amount: $5,000 to $5,000,000
- Repayment Term: One to five years
- Repayment Schedule: Biweekly or monthly
- Personal Guarantee: Required
- Collateral: Blanket UCC filing
- Minimum Credit Score: 500
- Minimum Annual Revenue: $120,000
- Minimum Time in Business: Six months
- Funding Speed: As soon as three days
Why we recommend SBG Funding: SBG Funding looks at factors beyond the business owner’s personal credit score to determine approval. SBG Funding looks at business performance through bank statement records, credit card sales, and other indicators to determine qualification for financing. Fees and interest rates for subprime borrowers may be quite high. However, SBG Funding is an option for businesses that have less than ideal credit.
National Funding: Best for Equipment Lease Financing
National Funding
What We Like
- Competitive interest rates
- Fast funding
- Fair qualification standards
What's Missing
- Frequent repayment cycle
- Higher minimum revenue requirements
Features
- Expected APR: 8% to 20%
- Loan Amount: $5,000 to $150,000
- Repayment Term: Three to five years
- Repayment Schedule: Daily or weekly
- Personal Guarantee: Required
- Collateral: Equipment
- Minimum Credit Score: 575
- Minimum Annual Revenue: $250,000
- Minimum Time in Business: Six months
- Funding Speed: One to three business days
Why we recommend National Funding: National Funding started out doing equipment leases and is a very competitive resource for businesses seeking lease financing for equipment. Its rates are competitive against other leasing companies and credit qualification standards are relatively relaxed, as the equipment you lease out will serve as collateral. National Funding also offers several other options for business owners with poor credit, with funding possible as soon as one business day.
Lendio: Best for Comparison Shopping
Lendio
What We Like
- Multiple options to obtain financing
- Online application is easy
- Once approved, funding can be relatively fast
What's Missing
- Qualification standards may vary based on type of loan
- Not obvious which lender may approve loan at time of application
Features
- Loan broker with an online application for financing
- One application gives you access to potentially multiple lenders and multiple loan types
- Partners with more than 70 lenders
- Funding in as little as 24 hours
Why we recommend Lendio: Unlike the other lenders profiled, Lendio is a loan broker that serves as a connector between businesses in need of financing and over 70 lenders that offer it. Lendio’s application process is easy and convenient for business owners and allows you to receive multiple loan offers so you can choose the one that best suits your business needs. Lendio offers a line of credit with a minimum credit score qualification of 560, which is a great option for someone with poor credit.
Lendio offers each of the options outlined above as well as MCAs, business credit cards, and commercial mortgages.
Types of Working Capital Loans
Depending on the need, there are several financing alternatives available to small businesses. The most common types of working capital loans and situations where those loans would be good for businesses are:
- Term loan: Good for businesses that need extended repayment terms to manage their cash flow or to finance some renovations
- Line of credit: Good for businesses who need immediate access to capital for operational cash flow and only need to borrow a portion of available funds
- Invoice financing: Good for businesses that often have a cash crunch caused by outstanding customer invoices and that may not qualify for a line of credit
- MCA: Good for businesses that cannot qualify for any of the other options, have significant revenue through credit card transactions, and need short-term capital—rates are often substantial
- Revenue-based financing: Good for tech-oriented businesses with stable revenue that need working capital to scale and are unable to obtain financing through conventional means
How We Evaluated the Best Working Capital Loans
In our review of the best working capital loans, we looked at a variety of financing options that businesses desired, knowing that obtaining a fast business loan was sometimes critical to helping a business out. Our criteria for evaluating the best small business working capital loans looked at the following factors:
- Repayment terms: How long will each funder give you to repay your loan?
- Rates and fees: How much will it cost to borrow money from each lender?
- Funding speed: Once a business is approved, how long will it take to get access to the funds?
- Minimum qualifications: What is the minimum length of time a business needs to be in operation, what is the minimum credit score, and what is the minimum annual revenue required?
- Collateral and guarantee requirements: Will the lender require some form of collateral and/or a personal guarantee for approval?
Bottom Line
There are many different options available to businesses to obtain working capital, each of which can meet a specific business need. There are options available for newer businesses and also for those with poor credit. Each of the providers we have listed will help your business meet its working capital needs.
